A Change in Consumption of a Good Resulting from an Increase

question 39

Multiple Choice

A change in consumption of a good resulting from an increase in purchasing power, with relative prices held constant, is referred to as:

• A) the income effect.
• B) the substitution effect.
• C) the wealth effect.
• D) the total effect of a price change.

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Definitions:

Gross Profit Margin

A financial metric that measures the difference between revenue and cost of goods sold (COGS), expressed as a percentage of revenue.

Horizontal Analysis

A financial analysis technique that compares historical financial information over a series of reporting periods.

Comparative Financial Statements

Financial reports that present the financial position and results of operations for a business across two or more periods, facilitating analysis over time.

Quick Ratio

A measure of a company's ability to meet its short-term obligations with its most liquid assets.